Accounting Non for Profit - 992 Words

Accounting for Capital Projects and Debt Service ------------------------------------------------- Questions for Review and Discussion 1. Budgets, and hence budget comparisons, are not as essential for capital projects and debt service funds because they are often on a project, rather than an annual, basis and spending is typically authorized on that basis. 2. When bonds are issued for more than their par value, the premium can be interpreted as an adjustment of the interest rate and transferred to the debt service fund — the fund in which resources for the payment of debt will be accumulated. Although the same interpretation can be placed upon bond discounts, there may be no funds available in the debt service†¦show more content†¦The Internal Revenue Service imposes strict limitations on the amount of arbitrage that governments can earn so as to avoid undermining the â€Å"subsidy† given to state and local governments in the form of the tax-exempt status. If governments could engage in unlimited arbitrage, they would have virtually unlimited sources of revenue (at least until an equilibrium in the interest rate structure between tax-exempt and taxable bonds was reached). 9. As a general rule, a government can benefit from a decline in interest rates only if its outstanding debt can be redeemed at less than current market value — i.e., if a call provision is attached to the debt and thereby imposes a ceiling on the market value of the debt. 10. An in-substance defeasance is a process by which a debtor refunds its debt in economic substance but not legal form. The debtor retires the debt in economic substance by setting aside (with an independent trustee) sufficient funds to make all required payments of both interest and principal up to the date at which the debtor may first exercise its call provision. The debtor borrows the required funds by issuing new debt at prevailing interest rates, which are lower than those that it is paying on the existing outstanding debt. In that way it is able to â€Å"lock in† the lower rates and save on interest costs from the date of the defeasance until the call date. GASB standards require a government to recognizeShow MoreRelatedAccounting Systems for Non-Profit Organizations602 Words   |  2 PagesAccounting systems for non-profits are designed to capture the organization’s financial position and its economic activities. Non-profit organizations use two methods of accounting; the cash method of accounting and the accrual method of accounting. The cash system records revenues when cash is received and records expenses when cash is paid. However, the cash method does not provide an accurate reflection of the economic condition of the not-for-profit organization (McCarthy, Shelmon, Mattie,Read MoreGovernmental Non for Profit Accounting Chapter 2 Quiz Essay755 Words   |  4 PagesChapter 02 - Principles of Accounting and Financial Reporting for State and Local 11. The accounting system used by a state or local government must make it possible A. To present fairly the financial position and results of financial operations of the governme nt as a whole, as well as fund financial activity in conformity with GAAP, and to demonstrate compliance with finance-related legal and contractual provisions. 12. Which of the following is not a characteristic of a fund as defined by GASBRead MoreComparative Analysis Of Fair Value And Historical Cost Accounting On Reported Profit1659 Words   |  7 PagesHistorical Cost Accounting On Reported Profit: A Study Of Selected Manufacturing Companies In Nigeria. (BESSONG, 2012) Study the importance of historical value and fair value cost accounting on reported profit. The study discussed how fair value accounting and historical cost accounting will have effect on the reported profit. However it is said that key objective of any business is to earn profit and it is also equally important to report the profit. Especially it is more important to record profit carefullyRead MoreInternational Financial Reporting System ( Ifrs ) Rules And Practices927 Words   |  4 Pageswith other countries’ accounting systems, the IFRS attempts to organize one financial standard system for businesses to report their financial statements. This article examines the relationship between domestic and global standards of accounting. The concept of developing a modern accounting standard in the Czech Republic, implies that most companies in that country are not willing to change their accounting standards. Throughout the history of the Czech Republic’s accounting standards, companiesRead MoreGovernment Accounting Standards Board versus Financial Accounting Standards Board1022 Words   |  5 PagesIn accounting, private companies are treated differently than governmental and non-profit companies. However governmental and non-profit companies use different reporting requirements from the private sector. The requirements for governmental companies use the Government Accounting Standards Board (GASB), whereas profit and non-profit companies use the Financial Accounting Standards Board. This paper will explain the purpose, discus the similarities, and differences between the GASB and FASB. Read MorePublic And Private Sector Accounting1357 Words   |  6 PagesIntroduction The major debate in accounting is about the appropriateness of adopting the private-sector accounting standards and practices to the public sector. 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Of whatRead MoreAbsorption and Marginal Costing1154 Words   |  5 PagesAbsorption and marginal costing (Relevant to AAT Examination Paper 3: Management Accounting) Li Tak Ming, Andy Deputy Head, Department of Business Administration, Hong Kong Institute of Vocational Education (Kwai Chung) Introduction Absorption costing and marginal costing are alternative cost accumulation systems used to ascertain product or job costs for inventory valuation and cost of sales. Absorption costing Absorption costing includes both variable and fixed production costs in theRead MoreCase Study11661 Words   |  7 Pagesinformation in two categories: accounting information and non-accounting information. The content of financial reports can be divided to accounting and non accounting information. According to Ahmed Belkaoui and Alain Cousineau (1977), accounting information is defined as quantitative, formal, structured, audited, numerical and past oriented material. While non accounting information is defined as qualitative, unaudited, narrative and it is future oriented prose. For accounting information, it can furtherRead MoreAccounting And Financial Reporting Methods894 Words   |  4 PagesIntroduction A non-profit organization is an organization exempted from making tax payments and its main objective is to offer the public with services without making any profits. It can be classified as a charitable, religious, educational or scientific organization (Strydom Stephen, 2014). Its excess funds are not shared among its stakeholders as cash dividend; rather they are reinvested back to the organization in the pursuance of its objectives. On the other hand, the sole purpose of the for-profit organizations